In a giant disused car plant on the edge of the moribund port, European Socialist leaders gathered yesterday at the Swedish city of Malmo to talk of revival, writes Sara Helm.

Names of the past were summoned up for inspiration. Along the Olof Palme Way delegates gathered to debate "Socialism in the 21st century - with or without jobs?"

In the nearby Francois Mitterrand room they spoke of "education, education, education". And nearby, close to a shrine to Willie Brandt, the delegates discussed "What kind of Europe, large or strong?"

Few at the 1997 Congress of the Party of European Socialists were placing much faith in the past; they were pinning their hopes of a Socialist rebirth on their new heroes, Tony Blair and Lionel Jospin. Effusive Swedish papers hailed a gathering of "kings of today", recalling a gathering of Scandin- avian kings in Malmo in 1914 to promote Nordic revival.

Europe's Socialists have waited long for this moment. The figures speak for themselves. Nine of the 15 European Union Prime Ministers are Socialists. Of 626 members of the European Parliament, 214 are in the party of European Socialists, by far the largest single group. Even the Nato Secretary-General, Javier Solana, present in Malmo yesterday, is a Socialist. "For the first time we are really in power," declared the delegates.

British MEPs tucking into their "new Socialist"-style pasta and bacon were relishing their sudden notoriety. "Only now do we realise how much Britain was despised when the Tories were in power. Now people want to listen to us," said Alan Donnelly, Labour MEP from Tyne and Wear. "It is exciting, a watershed for Social Democrats in Europe."

Nobody was in any doubt who had launched this revival. Mr Jospin may be the newest of Europe's Socialist leaders, but all expectations are pinned on Mr Blair. "Blair showed ordinary people that Socialism was not dead after all, even in the UK. He showed us a Socialism that is not about the Communism of years ago, but is for the 21st century," said Benny Wiklund, a Swedish trade unionist.

Such Continental enthusiasts were celebrating because they believe Mr Blair's victory will swell support for Socialism in their countries, too.

Sweden's Prime Minister, Goran Persson, is facing new political challenges from the right. The Germans expressed hope that their opposition Socialist Party, the SPD, would ride the Blair wave. They were also celebrating on Britain's behalf. "We are happy for you, too. You have escaped all those bad times. Your country was held up to us as an example of what happens when social values are forgotten - the racism, the unemployment produced by Thatcher and the man, what was his name? who followed him," Mr Wiklund said.

Whether Mr Blair could deliver, nobody in Malmo could be sure. Outside, the price of failure loomed over the water in the shape of giant lifting gear not used since the port closed, throwing 4,000 out of work. The Scandic Conference Centre, where the Socialists were meeting, housed a Saab car plant until three years ago when it was closed, with the loss of 2,000 jobs. Playing in pop bands such as Eggstone and the Cardigans - famous Malmo names - is now the most popular employment among the young.

Whether Europe's happy new Socialist family will be able to bury differences about revival was the unanswered question. Only this week Sweden announced it would not join monetary union.

Today in his speech Mr Jospin is expected to to call for wide-ranging new measures to redistribute wealth, harking back to protectionist French Socialism of old. New Labour's Tony Blair will want to promote flexible labour markets, disdaining any new measures under Europe's Social Chapter.

The delegates yesterday insisted Europe's Socialists have more to unite them than divide them. Voters had "empowered" them to fight the arrogance of the elites. They said they had learned the lessons of the past. Their slogan for the conference was "our responsibility - a new Europe."